The wealth or real balances effect indicates that
A. An increase in the price level will increase the demand for money, increase interest rates, and reduce consumption and investment spending.
B. A lower price level will decrease the real value of many financial assets and therefore cause a decline in spending.
C. A higher price level will increase the real value of many financial assets and therefore cause a decline in spending.
D. A higher price level will decrease the real value of many financial assets and therefore cause a decline in spending.
D. A higher price level will decrease the real value of many financial assets and therefore cause a decline in spending.
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Political scientist Elinor Ostrom won the 2009 Nobel Prize in Economics for demonstrating in detail how communities around the world
a. experience gaps in wealth and economic power. b. manage common pool resources effectively. c. see power as the ability to collaborate.
Suppose Stan transfers $1,000 from his savings account into his checking account. What are the effects on M1 and M2 money supply?
A) M1 increases; M2 remains the same. B) M1 decreases; M2 increases. C) Both M1 and M2 increase. D) Both M1 and M2 decrease. E) Both M1 and M2 remain the same.